NZ dollar slips ahead of RBNZ's OCR review

July 22
(BusinessDesk) - The New Zealand dollar slipped as investors
weigh the negative signs of a slowing economy against the
lure of rising interest rates.

The kiwi edged lower to
86.89 US cents at 8am in Wellington, from 87.12 cents at 5pm
yesterday. The trade-weighted index declined to 80.91 from
81.05 yesterday.

The New Zealand dollar fell last week
following more upbeat testimony from Federal Reserve chair
Janet Yellen which boosted the greenback, and as a drop in
dairy prices and slower-than-expected inflation dented
demand for the local currency. Still, the Reserve Bank is
expected on Thursday to hike interest rates for a fourth
time this year, increasing the lure of the kiwi in a global
environment of low interest rates.

"It's hovering, it's
not inclined to go anywhere," said Peter Cavanaugh, client
adviser at Bancorp Treasury Services. "Everybody is in
agreement that sometime in the future the kiwi is going to
be lower but nobody is prepared to take that first step and
say when, and equally, no one is prepared to make that first
step and push it down.

"We have seen the New Zealand
dollar run into tremendous support at these levels,"
Cavanaugh said. "At the moment, the higher New Zealand
dollar shows how much cash is king. It's global cash, and
cash looking for yield and looking for return."

In Australia, Reserve
Bank of Australia assistant governor financial markets Guy
Debelle is speaking at an investors forum in Sydney and
governor Glenn Stevens is speaking at the Anika Foundation
luncheon in Sydney.

The New Zealand dollar edged lower to
92.67 Australian cents from 92.72 cents yesterday, weakened
to 64.27 euro cents from 64.32 cents, declined to 50.88
British pence from 50.95 pence and slipped to 88.09 yen from
88.18
yen.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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